Mike Khouw Sees Unusual Options Activity In NXP Semiconductors

On CNBC's Options Action, Mike Khouw spoke about unusually high options activity in NXP Semiconductors NV NXPI. The company is reporting earnings on Wednesday and ahead of the event its put options volume was 6 times higher than the average daily put volume. Khouw said that the most of the trading activity in the name happened because of the February 77.5/70/65 put butterfly. He explained that a buyer of a put butterfly is looking for the stock to trade to the middle strike, in this case to $70, which is more than $12 lower from the current price of the underlying. The options market is looking for a move of 7 percent, which is surprising for the stock that has low multiple and has averaged only a 4 percent move on earnings, said Khouw.